The fall has represented a sea-change in the appetite for REIT stocks and took under the planned IPO of Colony American Homes Inc. this week, which could have raised around $245 million.

But the stock market may be missing a key point that rising rates can actually help the very business of Colony and its peers: Renting single-family homes.

When real-estate investment broker Greg Rand heard Colony was worried about market conditions in pulling the deal, he was briefly surprised: The conditions in his real-estate market aren’t troubling him.

Rand’s business, OwnAmerica, aggregates homes across the country and American Residential Properties, a single-family REIT like Colony that went public last month amid the stock boom, is his primary client.

Rand and the REITs are anything but normal buyers, they don’t need a mortgage on every home. The lower demand for houses bolsters the strategy of buying homes by the hundreds, spread out across regions and cities in the country, and turning them into rentals. The trend also has the double boost of meaning there are more renters out there for the homes.

Rand calls his company “high-speed cherry pickers” and paints a picture of the American Dream not with white-picket fences, but with rental agreements and shareholder certificates. He’s excited about marketing the idea of renters also buying shares in the REIT they rent from and he expects more IPOs in the future.

“You can be a renter and home owner simultaneously,” he told MoneyBeat. “Owning American housing is a good idea, no matter how you do it.”

That Colony yanked its IPO is the latest signal the stock market doesn’t appear to agree, or differentiate the single-family REITs from other REITs.

Shares of many REITs had been soaring in 2013, largely because REITs offered what investors craved: yield. It didn’t matter what kind of real estate was behind the trust, it just mattered that it delivered a regular shareholder payment.

But late last month the dynamic changed abruptly, as a creeping fear that the Federal Reserve might start tampering its bond-buying, sent investors looking for other outlets.

The MSCI U.S. Reit Index hit its highest point since October 2007 on May 21, closing up 18% on the year that day. There were a record-number of REIT share offerings, raising funds from investors looking for more exposure.

But that’s falling apart. The MSCI U.S. Reit Index is down 10% from its high and Colony pulling the IPO is a stark warning of dropping shareholder interest.

Many of the stocks getting hammered, and had previously been booming, are mortgage REITs that invest in mortgage-backed debt, which would be hurt by the changing Fed dynamics. But though the underlying business of single-family REITs aren’t the same, the stocks haven’t been separated.

American Residential Properties, Rand’s big client which IPOd on May 8, is down nearly 12% from its IPO while Silver Bay Realty Trust, which debuted in December, is off nearly 9% over the past month.

Rand said the market is missing the underlying truth with those stocks, and when he heard about Colony he called to see if they were selling homes.

Colony, which declined to comment to MoneyBeat, told him they were doing no such thing, he said, they just didn’t see the stock market as the right option now.